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Bend, don't break: how to thrive in the Fourth Industrial
Revolution
weforum.org
/agenda/2020/01/the-fourth-industrial-revolution-is-changing-all-the-rules
Agility and flexibility are the key traits of successful businesses in today's fast-changing
environment
Image: Wesley Tingey on Unsplash.com
This article is part of the
World Economic Forum Annual Meeting
The Fourth Industrial Revolution is rewriting the business rulebook.
This process has been painful for some, and a boon to others.
The difference between these two camps? Agility.
The 'move fast and break things' ethos that epitomized Silicon Valley business culture for
much of the 21st century's first decade has fundamentally changed the global economy. For
evidence of this, look no further than the French start-up,
Guppy
, which was launched in late
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2018 to dredge discarded electric rental scooters out of the River Seine. In just one day this
past summer, Guppy workers fished more than 50 shared mobility devices out of the river.
Now, Paris is
regulating
its scooter fleet.
Guppy’s story is an allegory for modern-day businesses operating in a world in which it
seems all of the old rules are meant to be broken. A new generation of businesses has
upended entire industries by removing middlemen, flouting conventional processes and
leveraging connectivity and automation in ways that have forced incumbent business leaders,
regulators and the global workforce to rethink everything they once believed to be sacred. But
the changes have not come without consequences. Many of the companies that pioneered the
go-go tech culture that produced these breakthroughs are now the poster children behind
calls for increased regulation, and – in some cases – have caused significant
collateral
damage
.
The World Economic Forum has dubbed this unique period in the evolution of business the
Fourth Industrial Revolution
– a moment in time when increased automation, artificial
intelligence (AI) and continued technological disruption will fundamentally change the way
we live, work and relate to one another. Accordingly, just as we have seen with previous
business revolutions, there will be many intended and unintended consequences that come
with each step forward on this journey. The challenge, of course, for those of us living,
working and forging a path through this period of radical change is how to stay on the right
side of history when the rules of engagement are changing so rapidly.
A great example of this very real-world challenge is playing out on the global stage in the area
of digital taxation. France
introduced a new digital tax
this past July, which applies a 3% levy
on revenues from digital services earned in France by companies with more than €25 million
($28 million) in French revenue and €750 million euros ($838 million) worldwide.
In introducing the new law, France has
joined a group of 20 countries
throughout Europe,
including Austria, Belgium, the Czech Republic, Italy, Spain and the UK, that have either
announced or published proposals to introduce digital services taxes. Now, the Organization
for Economic Cooperation and Development (OECD) has gotten in on the act, with
a new
proposal
to create an international framework to guide how and where these digital taxes
should be implemented.
What is the W
orld Economic Forum doing about the Fourth Industrial Revolution?
The World Economic Forum was the first to draw the world’s attention to the Fourth
Industrial Revolution, the current period of unprecedented change driven by rapid
technological advances. Policies, norms and regulations have not been able to keep up with
the pace of innovation, creating a growing need to fill this gap.
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The Forum established the
Centre for the Fourth Industrial Revolution Network
in 2017 to
ensure that new and emerging technologies will help—not harm—humanity in the future.
Headquartered in San Francisco, the network launched centres in China, India and Japan in
2018 and is rapidly establishing locally-run Affiliate Centres in many countries around the
world.
The global network is working closely with partners from government, business, academia
and civil society to co-design and pilot agile frameworks for governing new and emerging
technologies, including
artificial intelligence (AI)
,
autonomous vehicles
,
blockchain
,
data
policy
,
digital trade
,
drones
,
internet of things (IoT)
,
precision medicine
and
environmental
innovations
.
Learn more
about the groundbreaking work that the Centre for the Fourth Industrial
Revolution Network is doing to prepare us for the future.
Want to help us shape the Fourth Industrial Revolution?
Contact us
to find out how you can
become a member or partner.
From a purely economic standpoint, there is some logic to these tax proposals. As ever-larger
portions of our collective consumption are transmitted digitally, the idea of taxing these
transactions based on the location in which they are consumed rather than the location
where they originate is fairly logical. In practice, however, the idea of dozens of different
nations enacting their own tax laws to capture revenue from multinational tech companies
with locations all over the world is a recipe for massive conflict.
As a case in point, the Trump administration
responded
to France’s digital tax with the threat
of a 100% tariff on French Champagne, cheese and other goods.
The global trade standoff was eventually averted, but the uncertainty still lingers for
multinational technology companies who have been left juggling a global patchwork of new
digital tax laws, potential government standoffs over said tax laws and the constant need to
project future growth accurately while all of the inputs keep changing.
And that’s just one line item on the tax ledger. Add the barrage of new regulatory
requirements coming from all corners, the constant development of new technologies and the
mounting need for new skillsets to manage it all and the scale of the challenge starts to
become clearer.
We’ve been on the front lines of this revolution at Thomson Reuters. Our core client base of
tax and accounting and legal professionals have seen their industries fundamentally
disrupted by new technology and rapid-fire regulatory change. For some, the process has
been painful. For others, it has created huge opportunities. The difference between the two:
agility.
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In the field of law, for example, where the billable hour has been under pressure for decades
and a steadily-growing crop of
alternative legal service providers
has entered the marketplace
and made a considerable dent in the revenue streams of the establishment, the leading firms
have been largely unaffected by the changes because they have evolved their businesses. That
process includes everything from adopting the latest AI tools to make the legal research and
discovery process more efficient, to offering specialized services to help clients manage the
crush of new regulatory requirements they all face.
Across countless examples, the one universal truth we continually see proven as we march
through the early days of the Fourth Industrial Revolution is that start-ups and incumbents
who have the agility to seize new technologies and scale rapidly to adopt new ways of doing
things are the ones who thrive - no matter what comes around the next corner.
Ultimately, the secret to thriving in an environment in which everyone appears to be moving
fast and breaking things is not to break at all, but to stay flexible enough to bend when the
rules of the game keep changing.
License and Republishing
World Economic Forum articles may be republished in accordance with the
Creative
Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License
, and
in accordance with our
Terms of Use
.
Written by
Brian Peccarelli
,
Chief Operating Officer, Customer Markets, Thomson Reuters
The views expressed in this article are those of the author alone and not the World Economic
Forum.
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